My wife and I would like to buy a house. For this, we would have to borrow about 150,000 euros (all costs included). The problem is that we are 2 at home, but we only have a salary (1400 euros per month). Do you think a bank can lend us?
Income from a monthly salary of 1400 € is insufficient to obtain a mortgage of 150 000 €
Assuming that your annual net income amounts to € 1,400 over 12 months, or € 16,400, a simple simulation indicates that you can borrow 80,000 euros over 25 years, which gives a monthly payment of 462 €. This is to respect a debt ratio of 33% . It is clear that in your current situation you can not get a credit of 150,000 euros. It will probably limit the amount of your purchase to € 100,000 or postpone your project.
Think about if you buy a new home
Then in addition to this loan of 80 000 €, you can get a loan at zero rate if you buy a new home. This loan is repayable over 22 years including a total deferral of repayments for 18 years. The maximum amount can not exceed 20% of the total cost of the operation, you will be capped at 20 000 € but you will have nothing to repay over the first 18 years . Your debt ratio would therefore remain unchanged.
Rising cost of living will reduce the weight of monthly repayments
On the other hand, over the last 4 years, you will have to pay about 400 € per month. It will therefore be necessary to organize your budget to face this future expense, because the 2 monthly payments will add up and not rely solely on the increase of your incomes . It will not be easy if you still have only one salary in the couple, but things can change as well. On the other hand, the rise in the cost of living will “lighten” the weight of the credit charge which will not represent the same part of your salary as today.
If you want to make reliable comparisons, then you have to “update” the repayments made in 2008 from an assumption of rising cost of living , for example to 2.5% per year. The monthly payment 862 € will not represent in 18 years “that” 500 € approximately, which will allow you probably to assume the refund .
In conclusion, these recommendations allow a couple with a single salary of 1400 € net to realize a real estate project of a maximum amount of 100 000 €. However, we advise you to make several studies of financing but also expand your real estate searches and try to find a much cheaper.